Storm Lake locked out



Storm Lake will languish in erecting new housing units with a new rule from the Iowa Finance Authority requiring community contributions for low-income tax-credit projects. MBL Development of Kansas City intended to apply for the credits to put up 60 units in The City Beautiful on the east side of town, to which neighbors objected before the planning and zoning commission and the city council. They said an apartment complex would destroy the single-family residential nature of the neighborhood.

Their objections were answered, if unwittingly, by the state.

We don’t know precisely why, or at least we certainly do not understand.

We called the state agency five times and sent one email asking why the rules were changed last month without notice or reported discussion. We received no reply until Monday, when a sixth phone call rousted the program director who claimed that requiring community contributions will not necessarily stunt rural housing. She said the new rules could mean that cities would have to give out fewer tax incentives to developers if a housing trust fund were established. We have no idea where the capital from such a trust fund could be mined.

And neither does the finance authority, which makes the rule a little fishy.

Why would the agency ace out rural communities, which could never raise a community contribution ($350,000 for this project) for a low-income housing project? The IHFA claims it has to do with fair housing access. We understand that urban areas have more resources to meet the newly required match. Some urban developer(s) pushed through the rule change, we suppose, that would reroute funds from Storm Lake or Denison projects to Des Moines or Cedar Rapids projects. We have no idea who they are. We probably never will know. If this were not ramrodded, why no public hearing? Why does it take six phone calls and an email for an explanation with a project hot in the hopper in Storm Lake?

WE HAVE NEVER been big fans of the low-income tax credit. It primarily serves developers and investors. The program can create nice homes for the working poor. It also can create mini-ghettos if the owner doesn’t care about the property, which is not uncommon.

Storm Lake historically has been a town of single-family houses. It has changed as the community has grown. We have become resigned to the fact that the city must change with the times, even with our distaste for subsidizing the wealthy so the poor can get a roof over their heads.

Developing more housing long has been the main goal of the city council. It appeared that its efforts after some 20 years finally were gaining traction as demand has built steadily. Now you can’t find a place to rent in Early, much less Storm Lake. The market does not respond because there is not the income capacity here to support lots of new single-family homes. Someone just in from Myanmar cannot afford to buy a $150,000 house. They have a hard time scraping up a rental deposit.

A developer has a hard time building anything that can sell here. Chet Brecher spent his adult life trying to develop West Lake Estates. It was a slow slog. Just a couple homes are built every year inside the city limits. More than 500 new housing units are needed immediately.

Someone who has working capital and does the work himself maybe can make a new home work for a blue-collar family. That developer is a rare breed. The city has lots available but only Habitat for Humanity has expressed interest so far.

Storm Lake cannot grow without something other than new single-family construction.

Without a government subsidy, bankers and developers tell us, you simply cannot cash-flow an apartment complex.

WE DON'T WANT the city council throwing our money into buying down the cost of the developer’s project. Why should we subsidize a project that sells off tax credits to raise cash to KeyBank of Cleveland or Citibank of Sioux Falls?

It smells to us like something is being cooked.

Either the finance authority does not want more affordable housing in Storm Lake to frustrate poor immigrants, or it wants to write rural communities out of the tax credit program. Either way, the goals are accomplished.

Employers cannot expand if their workers have no place they can afford to live.

Meatpacking will not pay another $5 per hour so every happy loin cutter can buy a new house with a white picket fence.

Certainly, nobody in their right mind will develop low-income housing in rural Iowa without subsidy when the manufacturing wage is $10-15 per hour around here. We should pray that a jillionaire lays down a chunk of cash to develop housing with no intention of getting a return. If you believe that, you believe that we can build 500 new houses here on a working man’s paycheck.